Good morning and welcome to today\u2019s foreign exchange market commentary on Monday, the 27th of February.<\/p>\n
The G20 meeting over the weekend in Mexico City has failed to create much of an impact on the markets, presumably due to lack of any consensus over the next move to handle the ongoing crisis. There has been pressure on Germany to increase its contribution to the region\u2019s lifeboat fund \u2013 the European Financial Stability Facility, in order to ensure other non-European emerging economies do not face political opposition back home before they hike their contribution to the fund via the IMF.<\/p>\n
Top finance officials from around the world, including US Treasury Secretary Timothy Geithner, supported creation of a bigger safety-net to prevent future crises. At a crunch meeting in Brussels on Thursday, European official will debate whether to merge the current pot, the EFSF, with the proposed European Stability Mechanism \u2013 the permanent war-chest due to come into effect in July. Merging the two would give the 17-nation zone \u20ac750 billion in funds to combat the debt crisis.<\/p>\n
IMF chief Christine Lagarde has called upon countries outside the bloc to bolster the lending institution\u2019s resources and said the fund may require an additional $500 billion.<\/p>\n
Meanwhile Germany remained opposed to putting more money in the pot with Finance Minister Wolfgang Schaeuble saying it didn\u2019t make \u201cmuch sense\u201d. In an interview with news magazine Der Spiegel on Saturday, Interior Minister Hans-Peter Friedrich in fact went a step further and said Greece had no future inside the EU. Greece has already secured \u20ac130 billion in direct loans by 2014 while private creditors have accepted write downs worth another \u20ac107 billion.<\/p>\n
\u00a0CURRENCY RATES OVERVIEW\u00a0<\/strong><\/strong><\/p>\n GBP\/EURO<\/strong> \u2013\u00a01.1801 EURO<\/strong>: The single currency made broad gains on Friday as overall risk appetite improved after the Greek parliament formally approved the PSI deal. The Euro continued its forward march against the cable and the GBP\/EUR pair changed hands at 1.1765. The second leg of the impending LTRO launch by the ECB also strengthened the single currency. The European data calendar is light today while the German parliament votes on the second bailout fund today. The GBP\/EUR opens at 1.1813.<\/p>\n USD<\/strong>: The greenback lost ground against both the GBP and the EUR but made gains against the JPY. The USD sell-off intensified as the day\u2019s trading progressed on Friday and the GBP\/USD pair hit a high 1.5898 before consolidating its gains for the day. The dollar index, a measure of the greenback\u2019s strength against a basket of six leading currencies, fell to 78.342 compared to 78.678 the previous session. The GBP\/USD pair will largely be driven by investor\u2019s risk appetite today ahead of the ECB\u2019s LTRO on Wednesday. The GBP\/USD pair opens at 1.5860 this morning.<\/p>\n
\nGBP\/US$<\/strong> \u2013 1.5862
\nGBP\/CHF<\/strong> \u2013 1.4222
\nGBP\/CAN$<\/strong> – 1.5888
\nGBP\/AUS$<\/strong> \u2013 1.4874
\nGBP\/ZAR<\/strong> \u2013 12.1089
\nGBP\/JPY<\/strong> \u2013\u00a0128.35
\nGBP\/HKD<\/strong> \u2013\u00a012.3029
\nGBP\/NZD<\/strong> \u2013 1.9022
\nGBP\/SEK<\/strong> \u2013\u00a0 10.4238<\/p>\n